The Beneficiary Designation – An Important, but often Overlooked Document in an Estate Plan.

September 20th, 2018 by


One of the most important documents in an estate plan is one that is often overlooked: the beneficiary designation. For many of us, our assets are tied up at various financial institutions such as banks, investment firms, insurance companies, etc. These institutions are where we have our checking and savings accounts, money market accounts, stock accounts, life insurance, 401Ks, IRAs, the list goes on. In almost every case, these financial institutions provide us with a means of telling the institution who should receive our money when we die. How do we do this? Through beneficiary designation forms the institutions provide to us, that’s how! Beneficiary designations are forms on which various financial institutions allow account holders to specify who should receive the funds in the account upon the account holder‘s death.

Who is the designated beneficiary?

A common question that comes up when creating an estate plan is, “who have you named on your beneficiary designations?” Very often, the answer is, “I don’t know” or “no one.” Yet, completing beneficiary designations is often critical to making an estate plan function property. For example, and estate plan might include a revocable trust designed to receive and hold money from bank accounts or life insurance policies upon the death of the account holder or policyholder. However, if the beneficiary designations on those assets are not changed so that the trust is identified as the beneficiary, those assets may not be paid into to the trust. Instead, they may go to a person previously named on the beneficiary designation, and to whom the decedent no longer wish to pass those assets. Even worse, if no beneficiary is identified, the institution holding the funds may not release them until a probate case is opened and a personal representative is appointed.

Neither result is likely what the decedent intended when he or she created the revocable trust.

A consequence of not having one

Rather than making things easy for his or her family, they have been unintentionally made more complex because one of the keys to the estate plan, the beneficiary designation, was not properly completed.

Final thoughts

The beauty of beneficiary designations is that they can be completed, often without the assistance of an attorney, in a relatively short period of time. Beneficiary designations help to avoid the time and expense of probate court, and create circumstances where assets can be quickly and seamlessly transferred upon death. Even better, when a person gathers and organizes his or her beneficiary designations and keeps them with their other estate planning documents, it can significantly ease the burden on their family because the family will avoid having to go through old papers and files in an effort to determine what assets individual has and where they are located.

Beneficiary designations are one of the simplest forms of estate planning a person can engage in. On the filp side, ignoring beneficiary designations can render even the best laid estate plans ineffective and bring more stress and expense on family members.

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Jim is an attorney with Halling & Cayo, S.C. His practice focuses on workers compensation, personal injury, insurance litigation, and estate planning. He is a trained mediator and has additional experience in family law and general civil litigation.
Email Jim: [email protected]